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A Higher Minimum Wage Would Benefit Working Women, Their Families and All New Jerseyans

Key Facts

  • Women and people of color are the majority of minimum- and low-wage earners in New Jersey.
  • Full-time workers making the current minimum wage of $7.25 per hour earn $14,500 annually – about $3,600 below the poverty line for a family of three, and far less than the amount needed for a family to be economically secure in one of the most expensive states in the country.[1]
  • Close to half a million New Jersey workers and over 230,000 children would benefit if the minimum wage rose to $8.25 per hour. Indexing the wage to inflation would maintain these benefits over time. A bill pending in the state legislature would place an initiative on the ballot in November 2013 to raise the wage to this level and index it.
  • By boosting pay for over 250,000 women, increasing the minimum wage would help close the wage gap. In 2011, New Jersey women working full time, year round were paid only 78 cents for every dollar paid to their male counterparts.

 

Women, people of color, and their families are disproportionately affected by a low minimum wage.

  • The Economic Policy Institute (EPI) estimates that close to half a million New Jersey workers would benefit if the minimum wage were raised to $8.25 per hour, including almost 275,000 workers making under $8.25 per hour and over 200,000 workers who earn just above $8.25 per hour. More than half of the workers who would get a raise are women (55 percent) and more than half are people of color (55 percent).[2]
  • Parents comprise over a fifth of workers who would be affected by this minimum wage increase, and more than 230,000 children in the state have a parent who would get a raise. Parents who would see a raise contribute, on average, 41 percent of their families’ income. Nine percent of these affected parents earn the family’s entire income.[3]
  • Contrary to common perceptions, many minimum-wage workers continue earning low wages for a significant part of their careers.[4] For families who struggle to make ends meet, a higher minimum wage would provide added economic security for years to come. 
  • Comparing the change in costs of raising a family with the change in the minimum wage underscores this struggle: for example, while the cost of child care and health care in New Jersey rose by over 80 percent and 75 percent respectively from 1992 to 2011, the state’s minimum wage increased only about 40 percent.[5] Raising the minimum wage and indexing it to inflation would help prevent wages from sinking further relative to the cost of living.
  • In New Jersey the typical woman working full time, year round is paid only 78 cents for every dollar paid to her male counterpart.[6] Since women are overrepresented among low-wage earners, increasing the minimum wage would help close this 22-cent gap.

New Jersey’s wage standards are lower than in other states in the region and across the country.

  • Eighteen states and the District of Columbia have raised their minimum wages above the federal rate of $7.25 per hour, and ten states have indexed the wage to keep up with inflation.[7]
  • Many of the states with a higher minimum wage have a lower cost of living than New Jersey, which consistently ranks among the five states with the highest cost of living.[8] This means the minimum wage of $7.25 per hour is particularly inadequate in New Jersey.
  • Wages for tipped workers in New Jersey are especially low relative to other states. New Jersey is the only state in the Northeast with a minimum cash wage for tipped workers of just $2.13 per hour, and a total of 32 states and the District of Columbia set the tipped minimum wage at a higher level, including seven that have eliminated the subminimum cash wage for tipped workers altogether.[9] While employers are responsible for making sure that their tipped employees are paid the minimum wage, many workers are paid less due to wage theft and other practices.[10]
  • A Senate resolution approved by the Senate Budget and Appropriations Committee would put a constitutional amendment on the November 2013 ballot to raise the minimum wage to $8.25 per hour and adjust it annually thereafter based on a national measure of inflation. In January 2013, Governor Christie issued a conditional veto of a separate bill passed by the full New Jersey legislature, which would have raised the wage to $8.50 per hour and indexed it to inflation using a regional measure to calculate these ongoing increases.
  • A separate bill passed by the New Jersey Assembly Labor Committee, A-2708, would revise the allowable tip credit so the tipped minimum cash wage would reach 40 percent of the minimum wage in the year of enactment and 69 percent in the following year. It would also create a permanent relationship between the minimum cash wage for tipped workers and the minimum wage other workers are entitled to by law.

An increase in the minimum wage would benefit New Jersey’s economy.

  • Workers earning too little to get by cannot provide the spending boost New Jersey’s economy needs. Research has demonstrated that spending by households with a minimum wage worker can rise by about $2,800 in the year following an increase of just $1 in the minimum hourly wage.[11]
  • EPI estimates that raising New Jersey’s minimum wage to $8.25 per hour would generate about $195 million in additional economic activity in the state in the first year following the increase, leading to the creation of over 1,700 full-time jobs.[12]
  • Research contradicts the argument that raising the minimum wage harms business.  For example, one study found no negative employment effects resulted from different wage policies across contiguous counties,[13] and a Fiscal Policy Institute study showed higher rates of small business job growth in states with minimum and tipped wages above the federal level.[14]
  • Good wages make good business sense: a study of several large retail chains showed that those who pay and train workers better and hire more on a full-time schedule are more profitable and enjoy higher sales per employee than competitors.[15] More generally, increasing wages for low-wage workers can reduce turnover, boost worker efforts, and encourage employers to invest in their workers.[16]
  • Low wages also come at a cost to taxpayers, because many low-wage workers need to rely on public benefits such as food stamps, Medicaid, and the Earned Income Tax Credit (EITC).

A minimum wage increase would put money into New Jersey’s economy, creating jobs. It would also increase economic security for thousands of working families in New Jersey struggling to make ends meet and would help close the wage gap between women’s and men’s earnings.




[1] Nat’l Women’s Law Ctr. (NWLC) calculation assuming 40 hours per week, 50 weeks per year at $7.25 per hour.  U.S. Census Bureau, Current Population Survey, 2012 Annual Social and Economic Supplement, Table POV35 http://www.census.gov/hhes/www/cpstables/032012/pov/toc.htm  (last visited Feb. 4, 2012).

[2] Unpublished statistics from the Economic Policy Institute (EPI).  Oct. 12, 2012.

[3] Ibid.

[4] Carrington, W.J., & Fallick, B.C. (2001). Do Some Workers Have Minimum Wage Careers? Monthly Labor Review, 24, 17-27.

[5] State of New Jersey Minimum Wage Advisory Commission (Jan. 2012). Fifth Annual Report.

[6] NWLC calculations from U.S. Census Bureau, 2011 American Community Survey, http://www.census.gov/acs/www/ (Tables R2001 and R2002).

[7] U.S. Department of Labor, Wage and Hour Division (January 1, 2012). Minimum Wage Laws in the States. Retrieved May 9, 2012 from http://www.dol.gov/whd/minwage/america.htm

[8] For example, see 2007 data at: http://mailer.fsu.edu/~wberry/garnet-wberry/a.html. See also Berry, W., Fording, R., & Hanson, R. (2000). An Annual Cost of Living Index for the American States, 1960-1995. The Journal of Politics (62)2, 550-67.

[9] U.S. Department of Labor, Wage and Hour Division (January 1, 2012). Minimum Wages for Tipped Employees. Retrieved May 9, 2012 from http://www.dol.gov/whd/state/tipped.htm.

[10] Allegretto, S. A., & Filion, K. (2011). Waiting for Change. Economic Policy Institute. Retrieved May 17, 2012 from http://www.epi.org/page/-/BriefingPaper297.pdf.

[11] Aaronson, D., Agarwal, S., & French, E. (2011). The Spending and Debt Responses to Minimum Wage Increases. The Federal Reserve Bank of Chicago. WP 2007-03. Retrieved February 17, 2012 from http://qa.chicagofed.org/digital_assets/publications/working_papers/2007/wp2007_23.pdf.

[12] EPI, supra note 2.

[13] Dube, A., Lester, T. W., & Reich, M. (November 2010). Minimum Wage Effects across State Borders: Estimates Using Contiguous Counties. The Review of Economics and Statistics, 92(4), 945–964.

[14] Fiscal Policy Institute (March 30, 2006). States with Minimum Wages Above the Federal Level Have Had Faster Small Business and Retail Job Growth. Retrieved February 21, 2011 from http://www.fiscalpolicy.org/FPISmallBusinessMinWage.pdf. This study found that in states with wages above the federal minimum wage between 1998 and 2003, and minimum wages for tipped workers above the federal level of $2.13, the rate of job growth in small business exceeded the rate in other states.

[15] Ton, Z. (January–February 2012). Why “Good Jobs” Are Good for Retailers. Harvard Business Review, 90(1-2), 125-131.

[16] Lester, T.W., Madland, D., & Bunter, N. (2011). An Increased Minimum Wage is Good Policy even during Hard Times. Center for American Progress. Retrieved May 17, 2012 from http://www.americanprogressaction.org/issues/2011/06/higher_minimum_wage.html.

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The Center for Women and Work (CWW) is housed in the School of Management and Labor Relations at Rutgers, The State University of New Jersey. CWW is an innovative leader in research and programs that promote gender equity, a high-skill economy, and reconciliation of work and well-being for all. For more information about the Center, its research and programs, visit us on the web at www.cww.rutgers.edu.

The National Women’s Law Center (NWLC), www.nwlc.org, is a non-profit organization that has been working since 1972 to advance and protect women’s equality and opportunity. It focuses on major policy areas of importance to women and their families including economic security, education, employment, and health, with special attention given to the concerns of low-income women.